Too much testosterone is bad for the bottom line – at least in the hedge fund sector, CNBC reports.
A study undertaken by the University of Central Florida and Singapore Management University found hedge fund managers with high levels of the male sex hormone underperformed their less testosterone-ladened brethren by 5.8% per year. And if that weren’t bad enough, the office Alpha males are also more likely to be fired.
Researchers used computer software to gauge the facial width-to-height ratio of more than 3,000 hedge fund managers. Facial dimensions are proven to accurately indicate testosterone levels, CNBC reports.
According to the research, high-testosterone managers “trade more frequently, have a stronger preference for lottery-like stocks and are more likely to succumb to the disposition effect” – the tendency to sell at higher prices while holding on to assets that lost value.
Researchers also found that fund managers investing in hedge fund-of-funds prefer to invest with men who have testosterone levels similar to their own. That proved true on both ends of the hormone scale, CNBC reports.
This is not surprising to me. The emotional stresses are not conducive to under-thinking and snap decisions. I remember some research showing men routinely sold gains too early and held losses too long mostly tied to score keeping their need to be right. I’ve personally seen that one play out left and right.
I’m also not surprised by this at all as the vast majority of successful investors I’ve come across have not been classic alpha males.
I remember I had an interview for my dream job in my 20s for a hugely successful EM focused hedge fund in London and the 2 interviewers were maybe 5’10 and 140 pounds max, the slightest little men you’ve ever seen, they sat were their legs crossed like they had no balls and spoke like there was a baby sleeping in the room. Both went to Oxbridge and literally the 1st question they asked me made me after I presented my investment case made me want to totally reverse my recommendation. It made me consider if I actually wanted to work in the industry.
CNBC still acting like stock picking drives returns? Or has the world really not learned to trade like the rest of us that work at Dunn Capital? - (I don’t work at Dunn Capital).
No one is questioning the validity of the study (i.e. face measurements being an indication of T levels?)
That said, my wife says I have the jawline of the cartoon character from American Dad and during the crypto phase, if it wasnt for her, i would have backed the truck up into something now worth 1/4th the value (im still a major bull for what its worth)
There are known links between male face structure and both testosterone and intelligence (in separate ways). Similar correlations haven’t been found with women.
